Government is toying with at least with a couple of options to deal with NMDC’s Nagarnar steel plant. While there has already been an in-principle approval for strategic disinvestment of the 3 mtpa unit, the government might engage experts from steel firms like SAIL to run the plant, retaining the unit entirely with the state-run miner.
The steel unit, being built at an initial cost of INR 15,525 crore, is still under construction and is expected to be operational by early next year.
The government has already issued request for proposal (RFP) from prospective bidders for appointing asset valuer, legal advisor and transaction advisor for strategic disinvestment of the steel plant. The pre-bid meeting is taking place today.
At the same time, the government is open to the idea of engaging experts from steel companies like SAIL to run the plant, since the pure-play miner has no expertise to man the steel unit.
The Chhattisgarh government has already red-flagged the centre’s disinvestment programme apprehending any such move would jeopardize its effort to bring permanent peace in the Maoist-infested Bastar region with development and prosperity. The issuing of the RFP even after the state’s objection has baffled many including a section in the company.
However, steel ministry’s the other option of engaging experts from other steel firms seems more tenable as it would not disturb the unit’s public sector character, which is a pre-condition for the local people. It will be a win-win for NMDC and the local people of the region.
According to the RFP, proposed disinvestment of stake would be based on as-is accounting asset value and not on the basis on the intrinsic asset value. Sources said this would lead to a significant undervaluation of the asset. NMDC might incur a huge loss if the assets are sold on as-is basis since the cost overrun is estimated to be INR 7,000 crore due to a significant time overrun.
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